Millennials Lead Smart Home Holiday Season Shopping

"Best Buy is setting up dedicated in-store displays or 'experience centers,' to demonstrate Google Home and Amazon Echo’s capabilities, which will lead to greater consumer awareness of these devices and how they fit in the smart home ecosystem," says Parks Associates' Dina Abdelrazik.

By David KaplanNov 17, 2017 10:27AM

Millennials will represent the largest group of shoppers when it comes to Smart Home and consumer electronics purchases this holiday season, with 46 percent of younger consumers indicating “high intentions” to buy at least one device and 36 percent planning to give one as a gift, according to a survey by Parks Associates.

The Parks Associates report amplifies a study of expected activity by Millennials as Black Friday, the recognized kick off to the holiday season, approaches. Over 50 percent of millennial consumers feel that they are “better connected” and able to find information more quickly than retail associates, according to Zebra Technologies’ Global Shopper Study released this week.

“Consumer marketing strategies and technology evangelism by Amazon and Google have created attention for Smart Home and connected CE devices, creating an opportunity for a big jump in these products this holiday season,” said Elizabeth Parks, SVP, Parks Associates. “Fourteen percent of U.S. broadband households intend to purchase a smart video doorbell, potentially driving this device to similar adoption levels of smart thermostats and connected lighting products. While consumer intentions aren’t always realized, these findings give a good indication of the coming impact of the holiday purchase season.”

Among the other findings in Parks Associates report:

One-third of U.S. broadband households report a high intention to purchase a CE or smart home device this holiday season.

9 percent of U.S. broadband households report high intentions to buy a voice-enabled device, such as an Amazon Echo, Google Home, Apple HomePod, or Amazon Look.

40 percent of Amazon Prime members are very likely to buy at least one CE or smart home device this holiday shopping season.

To get a wider focus on the role these Connected Intelligence devices will play in the holiday season, we checked in with Dina Abdelrazik, research analyst, Parks Associates.

GeoMarketing: What is driving the purchases of smart home and CE devices?

Dina Abdelrazik: The benefits of connectivity drive purchases of smart home devices, particularly those offering safety and security in the home. Mass-market adoption of these devices depends on clear and compelling value propositions. Devices that are in the wheelhouse of safety and security are making inroads into consumer awareness because they have clear benefits to consumers. This is why devices like the networked security cameras achieve higher adoption rates compared to other smart home devices. It’s also why video doorbells have grown in popularity. They have a compelling security-related value proposition – seeing who is at the door in real-time and speaking with that person.

On the CE side, we see consumers taking advantage of holiday sales to upgrade mature products in their homes and lives. Smartphones and TVs will again be hot sellers, but not necessarily as gifts to others. Many of these purchases are meant for the householder themselves.

While Amazon Prime has a clear advantage when it comes to driving purchases of smart home devices, what other brands will be driving these product sales?

Amazon is running deals that drive the purchase of multiple smart home devices through smart home bundles. By bundling an Echo device with a Philips Hue smart light bulb, Amazon is opening a gateway to further smart home device purchase adoption. Through this strategy of pairing a “starter” smart home device with an Echo, Amazon can encourage consumers to continue buying new devices and build further upon their smart home ecosystem.

Google has taken a similar approach by bundling its Home device with a Philips Hue Color Starter Kit package.

I expect Best Buy and other retailers will push purchases of smart home products and kits. Best Buy is setting up dedicated in-store displays or “experience centers,” to demonstrate Google Home and Amazon Echo’s capabilities, which will lead to greater consumer awareness of these devices and how they fit in the smart home ecosystem.

Similarly, partnerships are bringing smart home products to the forefront. For example, Vivint and Best Buy have partnered to create the Best Buy Smart Home powered by Vivint displays in select stores starting in 2017. These types of collaborations will help push smart home awareness and adoption to the mass market.

What sort of impact do you think Amazon Prime will have on in-store sales for retailers/department stores this holiday season?

Retailers and department stores will face fierce competition from Amazon. Online shopping has continued to show growth over the years. Naturally, Amazon, as a leading e-commence company, will benefit from the appeal in online shopping. In the past few years alone, Amazon has repeatedly boasted record holiday season sales. Our data points to a favorable 2017 holiday season for Amazon as well. Amazon Prime members show strong purchase intentions for CE and smart home devices, both as gifts and for personal use. Parks Associates data reveals that 40 percent of Amazon Prime members are “very” likely to buy at least one of the CE devices listed in our survey (e.g., smartphones, gaming consoles, smart watches, tablets, etc.). For smart home devices, Amazon Prime members showed higher purchase intentions compared to non-Prime members. For example, 11 percent of Amazon Prime members reported a high holiday purchase intention for doorbells with a video camera as opposed to 8 percent among all broadband households.

However, Smart Home products in particular benefit from the one-to-one, face-to-face, consultative sales model that one can get through a retail or dealer sales channel. Because there are so many questions regarding compatibility, value propositions, and installation, brick-and-mortar retailers have an advantage in that they can demonstrate the product, answer questions directly, and guide the consumer through the learning and purchase process. Amazon recognizes this market reality, otherwise they would not have pursued partnerships with other retailers so aggressively.